Alexander Forbes Eyes Diaspora Cash With Pension Plan

Financial and risk services firm Alexander Forbes (AF) has launched a pension and savings plan for Kenyans in the diaspora, targeting the billions in remittances sent home every year.

Alexander Forbes Group CEO Sundeep Raichura. The financial and risks services plans to lobby the Treasury and the KRA to offer prefential tax treatment for its product. PHOTO | FILE

AF chief executive officer Sundeep Raichura said the firm will partner with the Kenya Diaspora Alliance (KDA) to roll out the plan, which will be regulated by the Retirement Benefits Authority.

The KDA will assist in marketing and promoting the plan to Kenyans living abroad. The alliance will get a commission for new business they bring into the plan.

“We will be the sponsor and administrator of this plan while KCB will act as the corporate trustee and custodian of the funds,” said Mr Raichura.

“The plan will offer Kenyans living outside the country individual retirement plans and other saving plans as well as cash-backed loans with a local commercial bank at concessionary rates,” he said.

Mr Raichura said the scheme will also have two registered local investment managers and a manager for Africa investments.

AF plans to lobby the Treasury and the Kenya Revenue Authority to offer preferential tax treatment for those saving under the plan while based abroad. Kenyans living abroad remit billions of shillings to the country annually.

The cash has become a key source of hard currency for both financial institutions and the government.

Central Bank of Kenya (CBK) data shows in the nine months to September, the remittances increased by 7.8 per cent to stand at Sh117 billion ($1.14 billion) compared to Sh108 billion ($1.06 billion) as at September 2014.

The monthly average inflows from the remittances for the past one year stand at Sh13 billion ($125.9 million) according to the CBK.

Kenyans in the US and Canada account for nearly half or 48.2 per cent of total remittance inflows, attributed to a significant number of citizens and availability of multiple and cheaper channels to send money back home.

Banks have been eyeing a larger slice of the lucrative cash transmission service for the diaspora billions, while asset managers have been wooing Kenyans abroad as a source of investment funds.

Private equity firm Cytonn Investments opened an office in Maryland, US, in October targeting Kenyans looking to invest in real estate back home.

The government has in the past indicated interest in tapping the diaspora cash pool through a diaspora bond, which would be issued along the lines of a sovereign bond.

Diaspora remittances traditionally ranked behind tea, horticulture, coffee and tourism as a source of foreign exchange for Kenya, but a rise in attractive investments such as real estate has encouraged Kenyans working abroad to invest back home.

Last year the diaspora remittances were the largest source of foreign exchange for Kenya, overtaking tea and tourism, a trend that is expected to hold this year with the remittances projected to near the $1.5 billion mark.